More oil-by-rail heads to region's refineries

These black tank cars, which each hold 700 barrels or 29,400 gallons of crude oil, are of a newer, sturdier design that the oil transporation industry is under pressure to adopt. (CLEM MURRAY / Staff Photographer)

By Andrew Maykuth, Inquirer Staff Writer

Posted: May 15, 2014

At the Delaware River wharf where Appalachian coal trains once unloaded their cargo, 108 rail tankers lined up Tuesday to deliver a new distant energy source - crude oil from North Dakota.

The Eddystone Rail Facility, built on leased land surrounding an aging Exelon Corp. power plant, is the latest oil-by-rail facility to open in the area, adding capacity to handle the cheap domestic crude oil that has become the salvation of the region's financially embattled refineries - but has also raised safety concerns about unprecedented rail movements of oil.

"If we didn't do what we did, the refineries are gone," said Jack Galloway, who created Eddystone Rail Co. and enlisted Enbridge Inc., one of North America's largest energy distributors, as the operating partner in the project.

The Eddystone facility is designed to receive 80,000 barrels of light North Dakota crude a day, where it is unloaded into a storage tank, and then pumped onto barges and delivered to refineries along the Delaware River. The investors aim to eventually double capacity to 160,000 barrels a day, or about two "unit" trains containing 120 rail cars.

Philadelphia Energy Solutions and PBF Energy opened oil-by-rail yards last year at their refineries to cash in on the reduced cost of domestic oil compared with imports.

The Eddystone Rail Co. is a merchant operation. "We're not married to a single refinery," said Galloway.

One client is the Monroe Energy refinery owned by Delta Air Lines just a few miles away in Trainer, which does not have room for its own rail yard. Monroe currently receives its domestic crude by barge from Albany, N.Y., where it is delivered by rail at a Hudson River terminal.

As with many energy booms, this oil-by-rail phenomenon comes with a dark side.

A series of fiery derailments in the last year involving North Dakota Bakken crude oil has raised concerns about whether authorities are fully prepared for the risks.

The environmental group Clean Water Action on Monday submitted a right-to-know request to Philadelphia's Office of Emergency Management, demanding that it release risk assessments, evacuation plans, and response plans to communities along the rail routes.

"The city cannot wait for a disaster to take action," said Mary Donahue, a spokeswoman for the group.

Galloway does not dismiss safety concerns, but said oil and other hazardous commodities have been moving by rail through populous areas for a long time, and industry is responding by improving safety measures.

"If that's the way to save a domestic refining business and improve the balance of trades, then everybody has to step up," he said.

The Eddystone project cost $140 million to build, twice its initial estimate. Construction costs soared because of winter-weather delays. More than 600 people were involved in laying the tracks, restoring an existing 200,000-barrel storage tank on the site, and installing pumps and pipe work.

Enbridge employs 11 people to manage the facility. An additional 33 are employed by Railserve Inc., the contractor that switches the trains, pumps out the rail cars, and loads the barges.

The mile-long trains are broken into two parts and travel like a merry-go-round on two concentric loops of rail that encircle the Exelon power plant. Forty cars can be unloaded at one time. The facility contains 14,000 feet of rail.

The facility is linked to Conrail's Chester Industrial Secondary line. The route is served by Norfolk Southern and CSX rail lines.

Steven Turnbull, Enbridge's senior manager of rail services, called the facility state-of-the-art. It includes an underground containment system to collect any spills, a foam fire-suppressant system, and monitors to detect explosive gas leaks.

"I've spent 37 years in the refinery business and I have never seen the level of atmospheric detection system we have here," said Turnbull.

The facility also includes a vapor recovery system to collect the emissions from the crude oil and pump them back into the railcars.

"We export the fumes back to North Dakota," said Erik L. Johnson, the vice president of Canopy Prospecting.

Tuesday's Norfolk Southern train, the second to make a delivery to Eddystone since the facility was inaugurated last week, arrived at 4 a.m., so its transit through the Philadelphia area was largely unnoticed.

The black tank cars, which each hold 700 barrels or 29,400 gallons of crude oil, were of a newer, sturdier design that the industry is under pressure to adopt because older cars are vulnerable to puncture during derailments.

The cars are owned by Bridger Logistics L.L.C., the Dallas trading firm that is marketing the oil moved through the Eddystone facility.

While much of the public discussion of the crude-by-rail boom has focused on safety issues, the industry says the domestic oil boom has saved the country billions of dollars in imports.

The head of the Carlyle Group, the investment firm that rescued the former Sunoco refinery in South Philadelphia in 2012, last week said that domestic crude now accounts for most of the raw material processed at the Philadelphia Energy Solutions refinery.

The switch to domestic crude reduced oil imports by $10 billion a year, Daniel A. D'Aniello, chairman and cofounder of the Carlyle Group, told the Greater Philadelphia Area Chamber of Commerce.

"We're sort of still waiting for the thank-you note from the White House," he said.

Nearly a quarter of all of the oil produced in North Dakota is now consumed at the Philadelphia refinery, he said.